Term deposit rates tipped to remain strong

Don Stammer, non-executive chairman at investment management firm Praemium, suggested that the Reserve Bank's (RBA) decision to lift the official cash rate to 4.75 per cent in November last year had been "pre-emptive" given that prospective inflation was within the target range and consumer spending "was a little soft".

However, writing for InvestorDaily, he predicted that the RBA will become increasingly concerned about the outlook for inflation over the course of this year as wage pressures build up and productivity growth nears zero.

This could see the cash rate raised progressively to 5.5-5.75 per cent, he said, hitting borrowers with higher interest rate charges but also benefiting long-term savers and investors such as those looking to compare term deposits.

"Our yields could move higher on the back of rising US bond yields," said Mr Stammer.

"And Australians are likely to continue enjoying attractive returns on at-call money and term deposits."

This article is brought to you by Mozo – Helping you compare term deposits

Rate & Review

Mozo provides factual information in relation to financial products. While Mozo attempts to make a wide range of products and providers available via its site it may not cover all the options available to you. The information published on Mozo is general in nature only and does not consider your personal objectives, financial situation or particular needs and is not recommending any particular product to you. Mozo may receive payment from product issuers for clicks on or applications for products marked as "Promoted". If you decide to apply for a product you will be dealing directly with that provider and not with Mozo. Mozo recommends that you read the relevant PDS or offer documentation before taking up any financial product offer. For more information please see Mozo's FSG, General advice disclaimer or Terms of use.